Game Over

On the face of it, John Riccitiello, outgoing CEO of video games company Electronic Arts (EA), held himself to the most exacting of standards.

In a resignation letter sent this week to employees, Riccitiello wrote: “It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100% accountable.” For this failure, Riccitiello said, he would head for the exits.

Talk to many people, especially gamers, outside the company, however, and Riccitiello’s reasons for departing start to look a bit understated. Morgan Little pointed out in a blog post at the Los Angeles Times that EA “won an online survey for ‘Worst Company in America’ in 2012, beating out the much-loathed Bank of America” and that EA’s stock value has plunged 68% since the end of 2007, when Riccitiello took the reins of the company. Added Stephen Totilo at Kotaku: “His plans sounded awesome. And then there were the results.” Kotaku even has a link to a long list of Twitter jokes being made about the resignation.

Photo credit: Chemisti
Photo credit: Chemisti

All of this, if accurate, raises the question of why Riccitiello’s resignation was so long in coming. The answer, in most cases of CEOs who overstay their welcome, is that there is insufficient accountability—Riccitiello’s pronouncements about being “100% accountable” notwithstanding.

As Peter Drucker asserted throughout his career, many private businesses fail to hold their executives accountable except under the most extreme circumstances. And executives themselves, complained Drucker in The New Realities, “have not yet faced up to the fact that they represent power—and power has to be accountable.”

One of the most important forms of accountability, Drucker suggested, was simply to measure results against goals: “Did the things that the strategy expected to happen in fact take place? And were the goals set the right goals, in light of actual development, both within the business and in the market, economy, and society? And have they been attained?”

Boards, Drucker believed, should also play a larger role in demanding accountability. In this respect, he thought, the for-profit world had much to learn from the nonprofit community.

The best nonprofits, Drucker wrote, have “a CEO who is clearly accountable to the board and whose performance is reviewed annually by a board committee. And they have what is rarer still: a board whose performance is reviewed annually against preset performance objectives.”

Drucker wrote admiringly of a Midwestern art museum in which all volunteers, including board members, “set their goals each year, and resign when they fail to meet their goals two years in a row.”

If such standards had been used at EA, Riccitiello may have been out sooner.

What do you think: Do businesses do enough to hold their leaders accountable—and, if not, what could change that?